Research reveals—sales compensation plans don’t provide the complexity or detail needed to compete

In a recently concluded webinar, Bob Kelly, Chairman of The Sales Management Association (SMA), presented initial findings from a recent survey on sales compensation management. Scott Sands, National Practice Leader, Sales Force Effectiveness at Aon Hewitt, and Rowan Tonkin, Practice Lead, Sales and Marketing Applications at Anaplan provided additional commentary on the data and offered recommendations to improve.

According to the SMA survey, today’s sales compensation plans give sales the information they need to understand pay and performance, help ensure sales people are paid accurately, and provide accurate budgeting information. But on the downside, these compensation plans don’t provide the level of complexity and detail reflective of today’s marketplace.

To start, many plans are just too simple. The majority of organizations (80 percent) have four or fewer metrics in their sales compensation plan. Specifically, these sales plans don’t deliver in three key areas of sales performance management (SPM): assigning accounts, establishing quotas, and uncovering the potential of each account (customer or prospect).

By connecting these sales processes within a cloud-based platform like Anaplan, sales ops leaders are able to eliminate the many point solutions that require close management to gather a transparent and holistic value of sales targets and forecasted revenue. But where to begin?

I recommend starting with account segmentation. Account segmentation today shouldn’t be based solely on a historical view by looking inside and backward at revenue received last year—sales ops leaders should also look outside and forward to business priorities, market dynamics, and how customers are buying now and will be in the future. Territory assignments should then reflect where the opportunities lie, and quotas driven by the share of opportunity potential that exists.

Companies clearly see the need for (and are working toward) a high level of connectivity among departments to create effective sales compensation plans. However, only a small number of survey respondents felt their current technology and systems were up to the task, and many continue to rely heavily on spreadsheets—24 percent of respondents said their company’s sales compensation technology is up-to-date, 17 percent said it integrates data between sales and finance, and a mere 9 percent said the company can integrate data between sales and marketing.

For a long time, the versatility and immediacy of spreadsheets held great appeal. But spreadsheets aren’t good at delivering the complex processes required for today’s sales compensation plans. Spreadsheets also weren’t designed for the scale needed to collaborate across a large number of teams comprised of hundreds or thousands of people. In comparison, a designed-for-purpose system such as Anaplan delivers the accuracy and scalability needed to keep up with any potential business or market changes while providing the versatility and immediacy for real-time insight into the numbers.

How does your sales compensation design and planning process stack up? Watch the webinar to gain advice on how to improve your design and planning process by using short-term course-corrections and incorporating a long-term strategy. See how your sales compensation plan can improve by retiring spreadsheets and sales point solutions—and utilizing the Anaplan platform for the end-to-end sales planning process.

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